Sunday, October 7, 2007

Avoidance

THE STORYWhen I was a boy, I was terrible at sports. I had very little muscle tone and was not well coordinated. As a result, I avoided sports in order to avoid ridicule.

The exception was high school gym class. Here I had no choice. Playing the sport was mandatory. It was my daily bout with humiliation.

The one exception to this rule was when the gym class played touch football. I was not a big fan of the game and I didn’t know the rules all that well, but still you had to play the game.

I would play as a tackle on defense. I was told that my role was to try to touch the quarterback before he got rid of the ball. I figured that the easiest way to get to the quarterback would be if I lined up in a place where there was nobody from the other side was standing. Since everyone knew how terrible I was at sports, the other team didn’t seem worried that I lined up in a place that was unguarded.

When the ball was snapped, I just ran unabated to the quarterback and touched him for a sack. Even someone as bad at sports as I was could occasionally get to a quarterback if nobody stopped him. Eventually, the other team figured this out and made sure someone tried to block me. But I figured that avoiding a tackle would still be my best tactic, so when the ball was snapped, I’d just spin to the left or the right and run in untackled towards the quarterback.

To keep me from spinning to the left or to the right, the other team started putting two guys on me—one on each side so I could not spin. Since I was in such poor athletic condition, there was no way that I could overcome that. However, by double teaming me, it left someone else uncovered who was often able to sack the quarterback. So I was still helping out my team.

THE ANALOGYBusinesses often use sports analogies to describe their strategies. They talk about “winning” or “defeating the enemy.” The strategy sometimes is described as a direct confrontation with a competitor and that we must fight hard to overcome them in glorious victory.

Although there are some benefits to describing strategy in sports-related terms, it can lead to some problems if taken too far. There are two weaknesses to a sports mindset. First, it assumes that the battle is a head to head confrontation with a single opponent. Second, it assumes that both sides are playing the same game by the same rules.

As we saw in the story above, I was not well schooled in knowledge about the game of football and only vaguely understood the rules. I only knew that I was supposed to try to touch the quarterback before he got rid of the ball. To achieve this goal, I did two things. First, I tried to avoid direct confrontation with the opposing team. Second, I didn’t pay any attention to the conventional rules which would make a tackle believe that they had to “tackle” someone (after all, it is part of the position’s name).

Because I avoided direct confrontation and didn’t play by the conventional “rules” of my position, I was able to succeed, even though I had no athletic skills.

Business strategies often work the same way. In most cases, business success does not come from directly attacking a competitor and their position, but rather by avoiding direct confrontation and moving into an uncontested space. In addition, most winning strategies tend to reinvent the rules for playing the game.

Think of how easy it would be to win a sporting event if you played in an arena where there was no opposing team, or if there was opposition, they were forced into playing by a less competitive set of rules than your team. Well, if you invent your strategy properly, you can set up that type of situation for your company.

THE PRINCIPLEThe principle here is “avoidance.” Great strategies typically either avoid direct confrontation with a competitor, or they avoid playing by the conventional rules of the marketplace.

1) Avoid Direct ConfrontationOver the years, there have been many classic head to head battles in the marketplace: Coke vs. Pepsi, McDonalds vs. Burger King, General Motors vs. Ford, and so on. One thing history tells us is that even over long periods of time, direct confrontations rarely cause a change in leadership. Coke stays on top of Pepsi, McDonalds stays on top of Burger King, General Motors stays on top of Ford, and so on. Head to head confrontations by a challenger are rarely successful.

Instead, success usually comes when a challenger avoids direct confrontation and moves into uncontested space. Pepsi may have lost the cola war, but they have a winner in Mountain Dew, which took on an uncontested space in the beverage market. Every time Coke has tried a direct attack on Mountain Dew, they have lost (remember Mello Yello?).

And then there was little Gatorade, who invented an entirely new beverage category, called sports drinks. By building strength in a brand new and uncontested space, it was difficult to overcome. The only way Pepsi could win in the new space was to acquire Gatorade.

Ford may have lost the automobile war, but they took an early lead in what was at the time the more uncontested space of pickup trucks. Ford has been able to successfully withstand direct attacks from GM on their pickup business for generations.

Finding a new, uncontested area and gaining an early strength can give a company an edge which is hard to lose. Good strategies exploit this principle. I heard a great story recently about Steve Jobs at Apple. When he came back to run Apple the second time, Jobs was taking over a company that had some difficulties. At that time, Jobs was asked what he was going to do in order to get Apple back in shape. His answer was that he was going to wait for the next big thing. As it turns out, the next big thing was digital music. Jobs quickly dove in to capture that new uncontested space with the ipod.

Jobs knew that if he tried a direct confrontation in computers, he would lose, so he looked for new uncontested space where his core competencies would be useful. With the ipod, Jobs made Apple into a strong winner again.

2) Avoid Conventional RulesThe second principle is winning by avoiding conventional rules. In this way, business is not like sports. The rules in business are not etched in stone. You can steal share away from the competition by playing by a different set of rules.

Take the retailer DSW. Its early success came by reinventing the rules about how shoes are sold. Before DSW, the traditional way of selling shoes in department stores was to hide nearly all of the inventory in a back room. Consumers were forced to give up control and sit down while a salesperson made choices for them out of the back room. DSW changed all that by putting all of the inventory on the sales floor. Customers could control their destiny and make their own choices.

Traditionally, shoes at department stores were sold through extensive promotions. The standard price was held quite high, so that huge % discounts could be claimed on frequent sales. This forced customers to wait on buying shoes until there was a sale. DSW changed the rules by having everyday prices that were similar to the sale prices of the other companies. Now customers could come in any time they wanted and be assured of paying a low price.

By changing the rules, DSW created a more appealing consumer proposition, giving them more control over the experience at a better overall value. It was difficult for department stores to change their rules to match DSW. First, their stores were not designed to display all of the shoes. It would take extensive and expensive remodeling to adopt the new rules of display. Second, the entire department store’s strategy revolved around high regular prices with deeply discounted sales. It would be difficult for department stores to price shoes in a manner differently than the rules being used for the rest of their store.

SUMMARYStrategies tend to be more successful if they follow one or both of the following principles. First, they avoid direct confrontation with an established leader and instead try to create leadership in a new and relatively uncontested space. Second, they reinvent the rules of competition in their favor, preferably in a manner which is hard for others to easily imitate. These two rules of avoidance tend to be much more successful than direct head-to-head competition.

FINAL THOUGHTSDuring the 1930s, the Green Bay Packers won nearly all of the football championships. Why? They had examined the rules of football and realized that the forward pass was legal. Nobody else in the league was using the forward pass at that time. As a result, opposing defenses were not designed for defending the forward pass. By changing the rules, they were able to win championships. You can do the same.

About Me

I have over 25 years of experience, having worked in strategy with a number of leading US retailers. You can learn more about me by visiting my digital resume (www.VisualCV.com/geraldnanninga) of the site for consulting (http://planninga-from-nanninga.webs.com)